Job seekers seem to be responding to the cooling job market. The number of new job seekers in August was 86% lower than in July. The influx of job seekers entering Ohio’s labor force drove rising unemployment levels over the past year. With fewer people entering the labor force, Ohio’s unemployment rate held steady at 4.5%.

The numbers: Seasonally adjusted data released today by the Ohio Department of Job and Family Services (ODJFS) show that Ohio lost 4,400 jobs last month, falling from a downwardly revised 5,668,400 jobs in July to 5,664,000 in August. Monthly numbers are preliminary and subject to revision. July’s revision shows an increase of 900 jobs from June to July, more modest than the increase indicated by initial data. August’s losses confirm the downward trend in the job market suggested by slowing growth in July, compared to strong job gains from April to June (+26,100).

“Inflation has been trending down since March. At a rate of 2.5% in August, inflation is the lowest it’s been since February of 2021,” said Molly Bryden, researcher with Policy Matters Ohio. “The Fed interest rate cut is very good news for Ohio, as the state seems to be experiencing the negative employment effects of anti-inflationary policy with slowing growth and job losses in August,” Bryden said.

“It is too soon to know whether the Fed lowered rates in time to reverse the downward trend that Ohio’s job market has seen the past couple months. Lower interest rates offer a glimmer of hope for Ohio’s working families, enhancing the borrowing power of both individuals and employers, delivering some economic relief to all Ohioans.”

The details: Service employers cut the most jobs this month (-3,300), with small yet consistent losses across most sectors. The only exceptions were private educational and health services (+900) and trade, transportation, and utilities (+800). While there was a slight drop in goods-producing jobs overall (-200), manufacturing saw substantial losses (-2,100), partially offset by strong growth in construction jobs (+1,800). The durable goods manufacturing sector continues to contract, losing 3,200 jobs between July and August. Similarly, public sector employment is down 900 jobs from last month, driven by another large loss in local government (-1,200), with modest growth in state government jobs (+300) and no change in federal government employment.

“Rising growth in construction jobs coincides with a large drop in durable goods manufacturing jobs, parallelling trends we observed last month.” said Bryden. “Notably, local government employment fell for the second month in a row. This is worth keeping an eye on, especially considering that public-school teachers – who make up a large share of local government employees – re-entered the workforce for the beginning of the school year. It’s critical to monitor Ohio’s teacher shortage, and public sector employment more broadly, now that American Rescue Plan funds are drying up and federal support for local governments and school districts dwindles before we see a full recovery from pre-pandemic levels.”

The household survey: The separate household survey showed the number of Ohioans unemployed fell to 263,000 in August, down 1,000 from last month, following a spike in unemployment from June to July (+10,000). In August, 4,000 Ohioans gained jobs, and 3,000 Ohioans entered the workforce to seek jobs. While Ohio’s labor force has grown consistently each month this year, Ohioans entered the labor force at a much slower rate this month after a peak in July (+22,000). The unemployment rate was 4.5% in August, unchanged from July. The nation’s unemployment fell slightly, down 0.1 percentage points from July to 4.2% in August.

For the first time since March, gains in employment outpaced the increase in Ohioans entering the labor force. From April through July, an average of 14,800 Ohioans entered the labor force each month, while the average month-to-month increase in employment was only 3,800. With cooling inflation and recent interest rate cuts, if unemployment continues to stabilize, economic conditions could shift to lessen the strain on Ohioans’ budgets, but faster job growth will be needed to preserve job-seekers market power in the labor market.